Family businesses sharpen competitive edge by embracing sustainability
Family businesses are increasingly focusing on sustainability, giving them a competitive advantage, according to research released today.
The report ‘Sustainable Value Creation’ published by the Institute for Family Business (IFB), reveals that 72% of family businesses have a sustainable strategy in place and that 79% have implemented sustainable business practices.
The findings also show that the family business sector provides one in three jobs in the UK and generates revenues of £1.1 trillion a year to the economy.
According to recent research from the financial services company Credit Suisse, not only does the sector contribute strongly to the economy but it is growing. In the last 12 months 60% of family businesses reported revenue growth of 5% or more and one in ten reported growth exceeding 15%.
The report focuses on several business management points that it claims can give an organisation long-term sustainability.
One point is that operating efficiency is a sustainable virtue. The report advises that business should be evaluated on use of sustainable and natural capitals rather than just on financial or physical assets.
As companies deal with depletion of resources, materials security and environmental impacts, the IFB argue that family businesses are seeking new and improved ways of operating.
The research stresses the need for sustainability to balance short and long term objectives, noting that because family businesses have a tradition on focusing on the long-term, they have a natural advantage when it comes to being an environmental, social and governance-based business.
The report shows that 40% of family businesses think sustainable strategy gives them a competitive edge in attracting and retaining employees. Meanwhile, 30% cite a positive impact on local community relations when they engage in sustainability.
The IFB director general Mark Hastings said: “Family businesses are already ahead of their competitors in understanding the benefits that a sustainable strategy can bring to their business.
“By publishing the new report, we want to provide a useful and practical framework for how companies can increase their commitment to a sustainable business. Companies have to find ways to make sustainability real in the context of their strategies, their operations and their relationships.”
Author of the report Jyoti Banerjee claimed it was a promising sign that while many companies were not committed to long-termism, there were still a lot of family businesses getting the sustainable balance right.
“Many companies are trapped in an outdated approach to value creation that has focused on short-term financial performance. It is great to see that there are some businesses out there, such as the family businesses in the report, prepared to act on the understanding that sustainable value creation requires action in multiple financial and non-financial dimensions in the short and long-term,” he said.